The idea of requiring the entire name string to be unique would IMO indeed create problems with having to recall the full name, which is fine when you are talking with them every day, but if you talked to a John Smith half a year ago, then made friends with a "Johnny Smith", only to stumble accross a "Jon Smith" and a "John Smiht", both of whom you don't like, then you log off for half a year and then "Jon Smith" stands before you, are you sure you would recall which one it was?
Why do people have nicknames? For various reasons. Mostly because they are shorter, not to recall, but to say, and result in abbreviations of the birthname. This would be an issue in PS if it did not have autocompletion.
The remaining reasons do have nothing to do with the length or complexity of the birthname. If they had, then everyone with a "problematic" name would end up with a nickname everywhere, but they don't. Likewise, even people with comparatively short and simple names do get nicknames. These stem from the small community creating the nickname. Someone by the name "Kerol" might well be called "Ker", but that doesn't provide greater efficiency in talking nor in recalling, as "Kerol" is both short, and easily said, typed and recalled. It's a way of individualising a name as part of identifying someone with a group (not within). Similar to the reason why people invented flags. (i.e., by calling someone a nickname you show to the bystanders "That guy is in some way associated with me". You also reinforce the feeling of being mutually associated within both speaker and nickname-owner. Hence, for all I can tell, nicknames are more of a group-psychological thing than a facility to improve communication efficiency, in general.)
The idea of having a clientside customisable nickname collection is good, but it doesn't really solve the issues menationed (and wasn't intended to do so). Something that I think would be needed more is to have a description that can be added to anyone on the BL, and possibly foldable categories that can be arbitrarily created and nicks sorted into.
That would not only help organise the quite unstructured BL, but also help you get up to speed after either you or a buddy took an extended break from PS. People have different reasons to place others on their BL, but currently, it's all one big alphabetically sorted list, requiring the player to keep track of the buddies.
But back to the names. Proposing more than one space in the name string, even if not unique, would require limits on how short one part may be, how many how short parts there may be in total, etc., pp.. These can be solved, but the outcome won't necessarily justify it. Especially not if the entire string needs to be unique, as you can have "Johnny a b Smith" and "Johnny b a Smith", only accounting for the obvious, not so subtle, variations.
Of coure there would be a way to allow fully customisable, nonunique names of any length. They would just become special commands, like /pos. It would be possible to assign a numeric ID to each char which can be retrieved by targetting the char and entering /id. That could be used to identify clientside BL entries ("John"-> ID 677612343132), as well as for /reporting. It could be extended to cover the message window (leftclick on a name in the chat box, select "ID", and you can /report it regardless of the number of identical names present). Still, while comparatively simple and allowing for the utmost flexibility, that system would be counterintuitive, and something for experienced players to use, while those most often in need of uniquely identifying someone are newbies, therefore it's not a viable option either.
Regarding the "targetting makes color change on target's screen": that is certainly possible, though then you will need to add multi-targetting facilities in order to talk to an on the fly group with quickly changing members.
While we are exchanging misconceptions about the targetting system: my interpretation was that having someone targetted might make only them hear my /say, much like a /tell. That targetting might have any effect on the color on the target's screen didn't occur to me until someone asked about that, possibly because I'm against of allowing others to alter the display/behaviour of someone elses system. Target colouring could be a reasonable exception.
Edit: Regarding the players being very protective about their identities: I think that that is fully understandable, and fully acceptable. The name you have represents you. It is all that distinguishes you from everyone else at a simple glance. So the name "is" you.
This must, however, not be mistaken as an argument for allowing unsuited names. It is not. An unsuited name is chosen and changed way before you ever get known, hence that name is not your identity yet. The identity comes as you interact with the other players. (Example name used for likelyhood of being known) When the forum software received the confirmation for registration of the name "Karyuu", it was nothing but one out of a bazillion people who have created a board account on that system. It could just as easily have been any other name, or changed into something else. Only with interaction comes identity. "One makes a name for oneself" does not refer to the keying in of some letters, it refers to linking a combination of letters, which by itself is meaningless, to an individual, a personality, an identity.
A case that likely is recalled by some is the transition of "FESFES" to "Efflixi Aduro" (and all the others who did similar things). Leaving all name quality and other issues aside, this one shows pretty well how meaningless the actual name is, provided it is reasonably dissimilar to other names. Works just like the association of an alt with a main char's player.
Therefore, a namechange, even after already having gotten well-known within the community, has almost neglegible effects. A very similar name (John Smith vs. John Smilh), however, does have a big impact, because the first requires, at most, a few days to get fully used to the new name by all parties (associating the identity with the new combination of letters), while the second one causes permanent confusion, blurring the identity.
